You are here

Worcester proposes throwing a ton of tax savings and just plain money at Amazon

The Telegram reports Worcester officials have proposed more than $500 million in tax breaks to entice Amazon to move to there, as well as a 20-year holiday from personal-property taxes. The city would also throw $1 million at Amazon to train workers.

Bezos is playing this perfectly, to no ones surprise. Massachusetts was already named the best state in the Union by US News and World report. We also have one of the highest income inequalities in the country. Cities and States must be vigilant in saying NO to these corporate giveaways.

No to money for sports teams, no to Olympics, etc. Didn't we start the revolution due to unjust taxes? Why should someone who wants to open a nail salon, or an accounting firm, or a restaurant have to pay full price and weave through the myriad regulations when the rich have politicians falling all over themselves to giveaway the working classes money and put the rich at the head of the line for government services?

Amazon would just move after 20 years before they actually start paying taxes. They'd start the bidding process all over again. Look at how GE moves their headquarters.

Giving money to sports teams is an even dumber idea. The public pays for a stadium for a greedy billionaire then they move the team to a new arena or entire city after 20 years and now taxpayers are paying millions per year for a useless stadium. Giving money to billionaires makes as much sense as Trickle Down Economics or attending Trump "University". Only suckers think its a good idea.

Yeah! Boston is the NO! city. Jobs? NO! Fun? NO!
We don't need any more big players here giving jobs to people. Imagine the effect on the quality of MY life if more people ride the T, drive on our roads, spend their money locally. It's just insanity man! When will it end!

The idea, which Boston used to lure GE and to keep Liberty Mutual (even though Liberty Mutual never, at least publicly, threatened to move from Boston) is that the city will take reduced future taxes in exchange for all the benefits of having a large company locate (or stay) in the city.

So, theoretically, Worcester could still come out ahead if the properties Amazon redevelops wind up paying more in taxes, even with the breaks, than whatever is there now. But $500 million worth? That's the, um, $64 million question.

For people who are asking if $500 million is worth it, it is a no brainer. The subsidy of $500 million is only approximately 25% of the new taxes Amazon campus will generate. In other words, this project will generate $1.5 billion of new taxes for Worcester it would not have without Amazon over 20 years.

The above figure does not include additional taxes from housing for 50,000 direct employees plus thousands of indirect jobs created. Let's say conservatively Amazon creates 10,000 new housing units in Worcester area. Assuming real estate taxes are $5k per unit per year, this will generate $1 billion of new taxes in 20 years for the region. In reality, this will number will be much higher due to indirect jobs.

Also, creating 10K housing means billions of dollars of investments, jobs and additional taxes. Also, State will generate $ billions over 29 years through income taxes. Let's say Amazon creates 50,000 jobs. At $100,000 salary, the State will generate $250 million a year, which is $5 billion if new taxes over 20 years. In reality,'it will be much higher number because of the indirect jobs created.

Also, we need consider state taxes. If each Amazon employee spends conservatively $20,000. That is more than $50m annually i.e. Over $1 billion over 20 years/ in reality again his number will be much higher due to indirect employments generated.

Opposing corporate subsidies as payments to 1 percenters is very naive and lack the most basic underdtanding of economic big picture. If used wisely, subsidies are like investments to the community that can generate a lot of jobs and new taxes.

So compared to over $8 billion of new taxes, $500 million subsidy is peanuts.

Refarding GE, $25 million in subsidy that Boston gave is nothing. Even without considering the new real estate, state income and sales taxes created by GE, the positive news that this generates about Boston is worth millions of dollars. Now every business leaders know that GE moved to Boston. The PR campaign of this level will cost millions of dollars.

In addition, we have had some high profile corporate hq moves to Boston including Cyber Boss and Alexion, which I think can be partially attributed to GE.

That is 500 million based off of what the land would be worth once it is built on. Right now the land is low value because otherwise something would be built on it right now. As soon as construction starts the value of the land goes up. Put a building on it the value goes up even more. The nicer the building , the more the value goes up. The more that builds around it, the more the value goes up.

Also keep in mind that they used different wording for the personal property exemption and the land tax exemption. Land tax they put a cap of 500 million , which would be for the life of the property or more likely a 20 year span. Where as personal property gets a full write off. So of that 500 million over the course of 20 years that would be 25 million a year on average. Fully built out , even in Metro West, it would not be unreasonable to think that they could pull in over 500 thousand per acre on average. If that were the case it is possible we are looking at a 50 percent exemption for 20 years or more likely a 75, then 60, then 40 then 25 type step down situation over the course of 20 years.

Which still would average 50 cents for every dollar going into city coffers plus full value for all surrounding land that has now gone up in price. Considering the land is currently not used that would be creating something out of nothing. Raising the local salaries of workers will increase the value of other real estate as well and bring in more service jobs.

This is where cities like Worcester have an advantage. If Boston takes a piece of land out of rotation and gives a sweetheart deal then that is land that can not be used for some other high value commodity. The presence of Amazon would also push home values up but unlike Worcester Boston has a serious housing crisis , so higher home prices could end up costing the city MORE money as it struggles to help lower income residents and moderate residents stay in place.

The short answer is Worcester can afford to give the 500 million because they are not actually giving up any value to get it. This is the same reason why I believe Detroit could be a major player if they could come up with a big bold vision.

Couple of problems here.
#1,not one single square inch of this area is public property.
Its all owned by Private Individual Tax Payers.
#2,who in their right mind would trust the boobs who get elected to High office in Worcester,or anywhere else,to make a guess as to what Amazon will be in the future.
#3,Worcester has such a poor record of choosing public projects,Worcester Center(a shopping mall with excessive parking fees),Worcester Common Outlets(same mall,remodeled-not),Union Station(remodeled depot-money pit-with the tax payers on the hook for empty buildings and parking garages.
Lets let Amazon find their own nest with their Own money,not mine...

Under optimal conditions, sure, 46 minutes. Much of the day, no chance. Getting to Logan from the Billerica site will be faster when there's no traffic and won't be more heavily affected by traffic than the Worcester site. TF Green is still longer than Billerica to Logan, though I don't know how traffic affects things there. It's worth noting that in that case, Providence is expected to deliver a bid as well.

During rush hour our overcrowded trains don't run on time, and our roads are clogged. Parking is difficult, and the cost of housing is extremely high. The conditions of many of our roads and bridges are dismal at best. We need to focus on fixing the issues we have here now before we go inviting another major company to the area. Anyone who thinks these problems will be fixed by bringing Amazon here needs to really sit down and examine the situation. Keep in mind, one of GEs solutions to commuter congestion was to build a helipad. GE coming to the area also hasn't led to any improvements plans for the T (at least none their talking about). Likewise, Amazon will do very little to help.

Let's face it - a lot of communities, Worcester and beyond, are desperate for a magnet.

But you are right - these giveaways are not good policy - and you have to wonder - does Bezos chase the desperate ones or the ones who can stand up and say "Here's the deal that everyone gets - you get the same." (I've never had much of a problem with the GE deal - despite their recent problems, the publicity was worth what we offered them and in the end it really wasn't a huge sum of money. We've already had a major insurance company from Hartford looking at us and we are a leading contender for Amazon - all in part because we already landed GE).

This works out to $25 million a year - lots of money for most people. Bezos could lose that much in an hour in stock value and not think twice about it.

In contrast $500 million for Worcester is ENORMOUS. And if they give away that much - how do they ever get their infrastructure etc. back on track as you note.

I'd call their bluff - offer little or nothing other than the best major American city to operate a tech biz in. Period. We don't need the headaches of doubling our growth without somebody paying for that growth.

Sorry, I really don't buy the line that GE being based here somehow makes the city more appealing for Amazon. Why?

Now, if we had lured GE here with a funded plan to improve regional transit and then Amazon decided that was a regional improvement which made Boston more appealing, sure. But that is 100% not what happened.

I'm pretty sure Amazon is more analytical than college kids trying to decide which party to go to based on who is already there.

GE has had their troubles, but their management is still highly respected in biz circles - and it's still a mammoth company know to have very smart, analytical management. When they chose Boston, it made people stand up and take notice so if there's an HQ move/relo afoot - Boston now pops to the top of the list because people say - hmmm - what were GE's decision criteria. I'm sure somewhere in the RFP the state/city said - and look GE recently came here for almost nothing - and this is why...

Doesn't mean we will win the biz - but we are going to be in the running for many such considerations thanks in part to GE. And again - when you look at what we gave them - it seems pretty clear that GE wanted to be here, but we threw them a few bones to make it look good for the board.

I think this would actually be a really great thing for Worcester. If Amazon was there, the city might be able to retain more of the talent coming out of WPI. A year after I graduated, I no longer knew a single person who still lived in Worcester. I've heard the city has been getting some nicer restaurants and things of that ilk in recent years. This would only help spur more development.

I agree completely -- parts of Worcester are great places to live (and ditto with the surrounding towns), there's a lot more going on there than you might think, there are great colleges and it's becoming a foodie town. And there are a lot of potential locations for a company to move into.

The problem is, the place the city selected is horrible. It's nowhere near commuter rail, really awful for cycling (Route 20 is one of the high-speed roads and major truck routes) and the nearby attractions are mostly truck-repair places, crane rentals and a couple of strip clubs.

The city's trying to rejuvenate downtown and has had some success with the old courthouse, which is on track (so far) to be converted to lofts. But this location is nowhere near downtown and wouldn't help a bit.

Worcester would have potential for Amazon, but this location is excellent if you want to kill any chance you might have to draw them in.